What A Huge Week.
The last week of October is renowned to be very busy & this year has been no different!
Sales this week were high not only in Auctions of which the REIV reported 882, of which 723 were sold and there were also 741 private sales. This makes last week the biggest for the year.
Our advocates were involved this week in 7 Private sales through out the week, & 9 auctions of which we successfully purchased 4 prior to Saturday!.
Buying a property prior to auction will always give a good negotiator a much better chance to secure the property than going to auction. There are less emotional offers before auction and therefore a skilful negotiator may be able to purchase the property for a lower amount.
If you have let the property go to auction the emotion on the day is huge, your partner or friends all push you along & the auctioneer doesn’t help you think clearly when you are listening to his jibes such as “ What is another $5000.00 going to do to you”....... WELL what it can do is make you feel very ill that you have over spent. It can make you wonder if the property was really worth those extra $$$$ that I spent. You will be hoping that the bank is going to value the property at that price you paid, otherwise they may not loan you the money you thought they would. (OOPS didn't think of that one) This can & does happen; we have had calls from a couple of people who went to an auction with little or no experience and apparently got caught up in the heat of the day & were the successful bidders on the day, THEN after the auction has settled they have realised they have over paid & there finance will not cover what they have done!
Unfortunately if you bid at auction you are bidding unconditionally & in the terms that the vendor wants, with the contract that has been on display prior to the auction....
If you are thinking of attending an auction do set a limit, & do be comfortable to walk away if you are unsuccessful...
Back to the current market.
This is still ruled at the moment by the demand vs. supply, we saw many properties being sold well above the agents quotes while understanding this was not underquoting, this is caused by buyer demand.
Each auction we attended had at least 4 bidders, moving the price well above the reserve..We do not see any change of this happening in the short term & even longer as supply is still very scarce.
The Real Estate Institute of Victoria released the September growth figures in the Herald Sun on Saturday for each Suburb. This is no shock as we have been saying for months that property in good location, with public transport nearby, shops & good schools close will perform well & continue to show excellent returns for capital growth.
The REIV has released its September Quarter Property Update which shows the median price of a house in Melbourne reached $480,000, an increase of 6.7 per cent since the June quarter.REIV CEO, Enzo Raimondo said that improved confidence in the Victorian economy combined with ongoing population increases has resulted in a new record quarterly median price. The improved confidence in the economy has revealed the underlying issue; a lack of supply, both for purchasers and renters. Unless there is a sustained increase in supply the REIV expects further pressure on prices.
REIV Melbourne Median Prices
REIV 1 August 2009
Sep Qtr 2009 % chg Jun-09 to Sep-09 Jun Qtr 2008
House Median $480,000 6.7% $450,000
Unit/Apartment Median $410,000 5.1% $390,000
Reports like this one above have been seen in every paper, magazine & news show, we have seen this coming since very early February this year, Even with the interest rates going up, the supply issue will continue to cause the prices to increase.
The old question - When is the right time to buy property?? The correct answer is yesterday, however if you did not buy yesterday & you have the ability to do so, then do it today!!!
History shows property is a good investment, when bought well.
The market closer to the CBD is always the strongest, followed by the 15 - 25 klm radius... As the government opens up the land further afar, they will need to ensure all the infrastructure to be built & up & running & fully developed before buyers will see little capital growth in these areas, so when buying further afar look to it as a longer term plan!!
Sam James
Monday, October 26, 2009
Monday, October 19, 2009
Market Comment - Monday October 19th 2009
There were just over 600 auctions at the weekend and 4 out 5 sold. On top of this 734 properties sold by private sale according to the REIV. With over 1000 auctions scheduled for next weekend agents all over Melbourne are busy shutting down as many sales as possible.
Whilst selling agents enjoy the street theatre of an auction and the publicity amongst the neighbours (their next potential clients), they also know that with a finite pool of purchasers it can sometimes be better to shut down a sale rather than only have one or two bidders.
For purchasers the equation is similar. If you can secure a property at a fair and reasonable price before auction you should; especially this week. If you are lucky and most potential purchasers go to other auctions then you might pick up a bargain. But if you are looking at good property there may be a huge amount of potential bidders at your auction. There are always risks as to which way to go.
The next 6 weeks will be a frantic lesson for the uninitiated in real estate. With our interest rates going up due to the unbelievable performance of our economy, the only way for property prices to move seems up. I would assume we will see a massive jump in prices during February and March next year and this will be on everyone’s mind between now and Christmas. For those who can buy this year, they will be able to both relax from the hunt and also bask in the upward tilt of the market.
If you are in the market for a property to live in or as an investment, give us a call for a no obligation appointment.
Ian James
Whilst selling agents enjoy the street theatre of an auction and the publicity amongst the neighbours (their next potential clients), they also know that with a finite pool of purchasers it can sometimes be better to shut down a sale rather than only have one or two bidders.
For purchasers the equation is similar. If you can secure a property at a fair and reasonable price before auction you should; especially this week. If you are lucky and most potential purchasers go to other auctions then you might pick up a bargain. But if you are looking at good property there may be a huge amount of potential bidders at your auction. There are always risks as to which way to go.
The next 6 weeks will be a frantic lesson for the uninitiated in real estate. With our interest rates going up due to the unbelievable performance of our economy, the only way for property prices to move seems up. I would assume we will see a massive jump in prices during February and March next year and this will be on everyone’s mind between now and Christmas. For those who can buy this year, they will be able to both relax from the hunt and also bask in the upward tilt of the market.
If you are in the market for a property to live in or as an investment, give us a call for a no obligation appointment.
Ian James
Tuesday, October 13, 2009
Market Comment - Monday October 13th 2009
After another week of 1250 sales The market may seem a little repetitive. The interest rate rise this week did absolutely nothing to dampen enthusiasm at auctions or negotiations. In fact, it has more than likely solidified the belief that the economy in Australia has turned the corner. More than slowing the property market down, I believe the next couple of interest rate hikes will push prices even higher.
The stock market is recovering but is still largely dependent on global events. This is still making the smaller, average investor a little nervous. There is still plenty of bad news coming from the US and Europe, albeit not as bad as last year. However, the property market, especially in Melbourne is being driven by very local factors; people entering our shores and a very large majority of these heading for Melbourne. There seems to be no change to these characteristics on the market in the foreseeable future.
Supply and demand are the leading factors driving price and this will continue for a very long time. Whilst the world economy will recover slowly and even the Australian economy will take time to get back to its peak, everyone needs somewhere to live. Whether renting or buying this means house and apartments will become much more valuable than they are now.
Over the next ten years or so we will begin to see density patterns change. Although most local councils tend to make life difficult for developers even doing simple dual occupancy sites, I can see this changing in the future. The cost of perpetually expanding Melbourne will simply be too much to bear on those 50+ kilometres from the CBD. This means we will see colossal increases in prices on apartments within the 10km radius and also on properties with over 600sqm of land up to about 30kms from the Melbourne CBD.
It will also mean that Geelong may see its largest price growth for a very long time. Some of the other larger regional centres may see some increased growth but it is unlikely to exceed that of the properties within 30km radius of the CBD.
Nobody can determine what will happen in the future, we can only look at historical trends as well as where we find ourselves now. The top third of suburbs in Melbourne have had median price movements of 10% per annum or more since 1980. I believe these will be higher over the next ten years.
But even if they remain at 10% then the average investor who has 20% equity in a current property or $100k cash deposit can have a property with equity (value of the property minus any loans) worth over $800k. For all you maths buffs out there, this is effectively over 20% per annum and about as safe as any investment can be. This assumption is made as a simple one off investment of one property, leasing it out at an average level and then having it valued with a rise in price of 10% per annum.
The above example is very simple; you can increase this exponentially when you begin to reinvest equity as soon as possible. If you wish to have a chat about any of the above please do not hesitate to call and make a no obligation appointment.
Ian James
The stock market is recovering but is still largely dependent on global events. This is still making the smaller, average investor a little nervous. There is still plenty of bad news coming from the US and Europe, albeit not as bad as last year. However, the property market, especially in Melbourne is being driven by very local factors; people entering our shores and a very large majority of these heading for Melbourne. There seems to be no change to these characteristics on the market in the foreseeable future.
Supply and demand are the leading factors driving price and this will continue for a very long time. Whilst the world economy will recover slowly and even the Australian economy will take time to get back to its peak, everyone needs somewhere to live. Whether renting or buying this means house and apartments will become much more valuable than they are now.
Over the next ten years or so we will begin to see density patterns change. Although most local councils tend to make life difficult for developers even doing simple dual occupancy sites, I can see this changing in the future. The cost of perpetually expanding Melbourne will simply be too much to bear on those 50+ kilometres from the CBD. This means we will see colossal increases in prices on apartments within the 10km radius and also on properties with over 600sqm of land up to about 30kms from the Melbourne CBD.
It will also mean that Geelong may see its largest price growth for a very long time. Some of the other larger regional centres may see some increased growth but it is unlikely to exceed that of the properties within 30km radius of the CBD.
Nobody can determine what will happen in the future, we can only look at historical trends as well as where we find ourselves now. The top third of suburbs in Melbourne have had median price movements of 10% per annum or more since 1980. I believe these will be higher over the next ten years.
But even if they remain at 10% then the average investor who has 20% equity in a current property or $100k cash deposit can have a property with equity (value of the property minus any loans) worth over $800k. For all you maths buffs out there, this is effectively over 20% per annum and about as safe as any investment can be. This assumption is made as a simple one off investment of one property, leasing it out at an average level and then having it valued with a rise in price of 10% per annum.
The above example is very simple; you can increase this exponentially when you begin to reinvest equity as soon as possible. If you wish to have a chat about any of the above please do not hesitate to call and make a no obligation appointment.
Ian James
Monday, October 5, 2009
Market Comment - Monday October 5th 2009
Market Comment 5th October 2009
Thank you to all those who came to see us at the Home buyers Show in Melbourne over the weekend. Finally after so many months of indecision, there were almost no industry experts predicting a fall in property prices over the next 12 months. In fact almost all of the talks I listened to were talking about a dramatic increase in property prices throughout Melbourne.
We saw the results for the last weeks sales go back to over 1200 sales for the week, with the clearance rate on nearly 500 auctions remaining over 80%. Over the next 9 to 10 weeks there will be a frenzy of activity. We should see plenty of new stock, but with vastly greater numbers of purchasers the key strategy to success will continue to be “Pay a fair price for a good property not a good price for a fair property”
Many of the experts talking over the weekend were assuming rates would rise but slowly. We are still coming out of a slowing economy and although Australia did substantially better than every other country in the world, our economic growth is still slow and will take time to get back to normal. Our trading partners are also dealing with their own economic issues. And although the property market may seem over heated the Reserve Bank has many other factors to think about before pushing rates up substantially. Any rate increase would be extremely detrimental to our unemployment rate. And whilst this has remained in an excellent position, it is still poised delicately on a razor’s edge. Any slow down in domestic spending will adversely affect unemployment.
To all those who attended my talk over the weekend on negotiation, my notes are available as a PDF. We are sending them out to all those that left their email address with us at the stand, but if you weren’t able to you can send us an email at chris@jpp.com.au and request the notes.
Ian James
Thank you to all those who came to see us at the Home buyers Show in Melbourne over the weekend. Finally after so many months of indecision, there were almost no industry experts predicting a fall in property prices over the next 12 months. In fact almost all of the talks I listened to were talking about a dramatic increase in property prices throughout Melbourne.
We saw the results for the last weeks sales go back to over 1200 sales for the week, with the clearance rate on nearly 500 auctions remaining over 80%. Over the next 9 to 10 weeks there will be a frenzy of activity. We should see plenty of new stock, but with vastly greater numbers of purchasers the key strategy to success will continue to be “Pay a fair price for a good property not a good price for a fair property”
Many of the experts talking over the weekend were assuming rates would rise but slowly. We are still coming out of a slowing economy and although Australia did substantially better than every other country in the world, our economic growth is still slow and will take time to get back to normal. Our trading partners are also dealing with their own economic issues. And although the property market may seem over heated the Reserve Bank has many other factors to think about before pushing rates up substantially. Any rate increase would be extremely detrimental to our unemployment rate. And whilst this has remained in an excellent position, it is still poised delicately on a razor’s edge. Any slow down in domestic spending will adversely affect unemployment.
To all those who attended my talk over the weekend on negotiation, my notes are available as a PDF. We are sending them out to all those that left their email address with us at the stand, but if you weren’t able to you can send us an email at chris@jpp.com.au and request the notes.
Ian James
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